Ling owns 3 passive investments. During the last two years, she has the following income and loss from each activity:
?
$$\begin{array} { l r r }
& 2017 & 2018 \
\text { Activity 1 } & \$ ( 14,000 ) & \$ ( 6,000 ) \
\text { Activity 2 } & ( 6,000 ) & ( 1,000 ) \
\text { Activity 3 } & 8,000 & 12,000
\end{array}$$
At the end of 2018 what is the amount of suspended loss allocated to Activity 2?

Question

Ling owns 3 passive investments. During the last two years, she has the following income and loss from each activity:
?
$$\begin{array} { l r r } 
& 2017 & 2018 \
\text { Activity 1 } & \$ ( 14,000 ) & \$ ( 6,000 ) \
\text { Activity 2 } & ( 6,000 ) & ( 1,000 ) \
\text { Activity 3 } & 8,000 & 12,000
\end{array}$$
At the end of 2018 what is the amount of suspended loss allocated to Activity 2?

Quizplus · Accepted Answer

The suspended loss is the amount of loss that cannot be deducted in the current year because it exceeds the passive income from all passive activities. In this case, the suspended loss is calculated as follows:Suspended loss = Total loss from passive activities - Total passive incomeTotal loss from passive activities = $14,000 + $6,000 + $1,000 = $21,000Total passive income = $8,000 + $12,000 = $20,000Therefore, the suspended loss is $21,000 - $20,000 = $1,000.The suspended loss is allocated to each passive activity based on the ratio of the loss from that activity to the total loss from all passive activities. In this case, the ratio of the loss from Activity 2 to the total loss from all passive activities is $1,000/$21,000 = 0.0476.Therefore, the suspended loss allocated to Activity 2 is $1,000 x 0.0476 = $47.62.The suspended loss allocated to Activity 2 is rounded to the nearest dollar, which is $48.Therefore, the correct answer is A) $1,695.

Ling Owns 3 Passive Investments At the End of 2018 What Is the Amount of She